Singapore light distillate stocks hold above 16 mil barrels as gasoline, blendstock imports surge

Singapore — Commercial onshore light distillate stocks in Singapore, the region's largest oil trading hub, remained above the 16 million-barrel mark in the week to Wednesday due to a surge in gasoline and blendstock imports, data released late Thursday by Enterprise Singapore showed.

Stocks of light distillates totaled 16.273 million barrels in the week ended April 22, edging down from a 13-month high of 16.476 million barrels the week before, the data showed.

It is the second consecutive week that stocks have surpassed 16 million barrels, sharply exceeding the weekly average of 14.47 million barrels in March and 13.26 million barrels in February, the data showed.

Gasoline imports into Singapore over April 16-22 at 659,284 mt were almost three times higher than 171,916 mt the week before.

Traders attributed the surge to the deep contango that has emerged as demand plunges due to global COVID-19 pandemic lockdowns since mid-March, prompting market participants to seek storage facilities in Singapore.

"Demand has fallen more than refiners can cut rates, so naturally in this extremely oversupplied market, we have a steep contango," a Singapore-based source said.

This was reflected in the front month May/June swap spread being assessed at minus $2.45/b at the close of Asian trade Thursday, sharply lower than a month ago, when the front month May/June swap spread was assessed at minus $1.40/b on March 23, S&P Global Platts data showed.

"Demand for product [gasoline] is very bad, so people are just taking whatever they can get and moving it into tanks," the source in Singapore said.

Singapore's inflows of naphtha, reformate and other blendstocks almost doubled over April 16-22 to 167,962 mt from 55,738 mt the week before, the Enterprise Singapore data showed.

Naphtha remains in demand by Asian steam crackers, which are mostly operating at close to full capacity due to favorable petrochemical margins, trade sources said.

"The MOPJ naphtha crack needs to go up to $100/mt before steam crackers reduce operating rates; we have a time lag to cargoes [between upstream prices affecting downstream], so within the next month no one will be reducing operating rates," a naphtha trader with a North Asian end-user said.

The CFR Japan naphtha physical crack against front-month ICE Brent crude futures flipped back to positive this week and rose $18.075/mt day on day to $66.80/mt at Thursday's Asian close. The crack was last higher on February 14 at $67.575/mt, Platts data showed.

Asian steam crackers have capitalized on recent bargain prices for naphtha feedstock cargoes, which has helped to improve petrochemical margins.

The benchmark naphtha C+F Japan cargo was assessed at $232.25/mt at Thursday's Asian close, up $52.50/mt on the day. In comparison, the March average was $290.26/mt and the average for April to date is $192.96/mt.